Last week saw the newest quarterly earnings release from Horace Mann Educators Corporation (NYSE:HMN), an important milestone in the company's journey to build a stronger business. Revenues were US$337m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.87, an impressive 21% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Horace Mann Educators after the latest results.
Taking into account the latest results, the most recent consensus for Horace Mann Educators from three analysts is for revenues of US$1.32b in 2021 which, if met, would be a reasonable 3.1% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 2.8% to US$2.95. In the lead-up to this report, the analysts had been modelling revenues of US$1.34b and earnings per share (EPS) of US$2.85 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$41.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Horace Mann Educators, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$40.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Horace Mann Educators is an easy business to forecast or the the analysts are all using similar assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Horace Mann Educators' revenue growth will slow down substantially, with revenues next year expected to grow 3.1%, compared to a historical growth rate of 5.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.1% next year. Factoring in the forecast slowdown in growth, it seems obvious that Horace Mann Educators is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Horace Mann Educators' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Horace Mann Educators' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$41.00, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Horace Mann Educators going out to 2022, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Horace Mann Educators , and understanding them should be part of your investment process.
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